Domestic investors sold off stocks which caused thousands of shares to drop in prices (275 shares saw prices fall to the floor prices), while foreign investors came back and bought in bulk. 

Vicente Nguyen, CIO of AFC Vietnam Fund believes that profit taking was one of the major reasons, and brokers’ calls for sale discounts. The investors’ weak psychology and crowd following led to such a trading session. There was no new economic factor to affect the stock market.

Real estate shares had the sharpest price declines because they had attracted big speculative cash inflow and had increased significantly despite gloomy business performance. 

The VN Index decreased only by 4.5 percent, not sharply enough to cause a call margin on a large scale. The problem would take place only if another 5-7 percent decline occurs. The liquidity on the August 18 trading session was VND42 trillion, or $1.75 billion, twice as much as the average value per trading session recently. 

The high liquidity, according to Nguyen, is also normal. When there are sellers, there will be buyers who seek to purchase good shares at good prices. In most such sale-off cases, the sellers are individual investors and the buyers are institutional investors.

Commenting about the debut of VinFast shares on Nasdaq, Nguyen said the listing is good news for Vingroup and the entire Vietnam’s economy. For Vingroup, the event will increase the opportunity to access the international capital market and to mobilize capital. This will create a driving force for other Vietnamese enterprises to seek international capital.

The noteworthy thing is that VinFast chose to list via SPAC (special purpose acquisition company), not a traditional IPO (initial public offering).

Asked if the VinFast share price fluctuations on Nasdaq was a factor that had a negative impact on Vingroup share prices (the share price dropped to the floor level on August 18), Nguyen said ‘yes’.

Vietnamese investors think that if VinFast is valued at $85 billion and Vingroup holds 51 percent of VinFast shares, Vingroup must be valued at above $42 billion, not including Vinhomes and Vincom Retail. When VinFast price goes down, therefore, the Vingroup price will go down proportionally. 

“However, in our eyes, for an investment fund, these factors don’t have relations. Of course, the viewpoints of investment funds may vary,” Nguyen said.

Regarding the case of the ‘debt bomb’ Evergrande, the second largest realtor in China, which has filed for Chapter 15 bankruptcy protection in the US, Nguyen said it may, to some extent, have a short-term impact on Vietnam’s economy.

The real estate crisis will cause Chinese purchasing power to decrease sharply, thus leading to a reduction in demand for imports from Vietnam. This is an indirect impact. 

What will affect Vietnam’s real estate firms is the State Bank of Vietnam’s (SBV) Circular 06 on lending to the real estate sector.

Many real estate firms mobilizing capital from clients through contracts on cooperation and investments, or contracts on capital contribution for business, cannot satisfy the requirements. 

"I personally think that the circular will create a ‘purge’ to the market. This will help companies which are decent in doing business and have good legal conditions expand market share and attract more clients," he said.

Meanwhile, the companies with weak financial capability will easily fall into long hibernation. The market will step by step fully recover, slated for 2025-2026.

Commenting about bank shares, Nguyen said the banking sector may face difficulties because of the bad debt increase, but it will weather the storm because this is the backbone of the national economy and will receive support from the government. 

Bank shares in the long term have potential. At present, the shares are very attractive with P/E just around 10X and P/B around 1x.

The current deposit interest rates are low which will encourage investments in the stock market. The trading value on August 18 was $1.5 billion.

"I believe the stock market is in a long-term uptrend period, at least for the next five years. You just need to choose the right companies to invest in, and wait patiently, and you will win big in the next five years," he said. 

Manh Ha